PD Editorial: Let Medicare negotiate cheaper drug prices

Democrats continue to wrangle over a $3.5 trillion spending bill full of money for social programs. House Speaker Nancy Pelosi has conceded that lawmakers will have to pare it back to meet demands from moderates in the Senate. During the negotiations, lawmakers should protect one of the most popular provisions in the bill: allowing Medicare to negotiate better prices for prescription drugs.

Congress enacted the current prohibition against Medicare using its enormous buying power to negotiate with drug companies for lower prices in 2005. It guarantees that American seniors pay more for their medications than citizens of other developed nations.

The power of bargaining is evident at the Department of Veterans Affairs, which is not subject to such a prohibition for the 6 million veterans it covers. The VA has negotiated much lower prices for drugs — about half what Medicare Part D pays to reimburse private insurance companies for the same drugs.

The federal government could save up to $450 billion over 10 years if Medicare could negotiate drug prices. The Congressional Budget Office estimates the provision also would increase federal revenues by $45 billion by lowering costs for employer-provided health care plans and increasing employees’ taxable incomes. Beneficiaries would pay less, too.

Polls shows near-universal support among Democrats for giving Medicare the power to negotiate prices with the pharmaceutical industry, but that change has remained elusive, even as part of a reconciliation package that Democrats can pass with no Republican votes.

Thank centrist Democratic holdouts, like Rep. Scott Peters of from San Diego, who have received huge contributions from Big Pharma. Pharmaceutical PACs and employees have given $860,000 to Peters’ campaigns over his career. He is the top recipient of such largesse in the House in the 2022 election cycle.

His district is home to many biotech and pharmaceutical companies. He says that allowing Medicare to negotiate lower prices would deprive those companies of revenue to pay for research and innovation.

“You only get that money at the cost of American science, and I don’t think that’s a good price to pay,” he said.

Americans shouldn’t pay such a high price for that research and innovation, which is often taxpayer-supported to begin with. Prescription drug prices in the United States are up to three times higher than in other countries even though patients in those countries benefit from new drugs, too.

Rep. Mike Thompson, D-St. Helena, has been fighting to allow Medicare to negotiate drug prices since the prescription benefit was added. He co-sponsored H.R. 3, the drug price negotiation bill included in the reconciliation package.

The bill would allow the secretary of the Department of Health and Human Services to negotiate the prices of at least 50 drugs without generic equivalents, with financial penalties for drug companies that refuse to negotiate or fail to negotiate successfully.

It would cap the negotiated price at 120% of the Average International Market price paid by at least one of six target countries: Australia, Canada, France, Germany, Japan and the United Kingdom.

It would be a tragedy if this important provision — which could help pay for other benefits in the reconciliation proposal — were scuttled because of pharmaceutical industry lobbying and contributions.

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